Sunday, February 28, 2010

Pakistan's Proxy War on IndiaSaturday's Kabul bombing is part of a disturbing pattern of attacks on Delhi's interests.( http://online.wsj.com/article/SB10001424052748704231304575092522586039704.html )

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By BAHUKUTUMI RAMAN

There's a new front in the Pakistan-based jihad being waged against India: Afghanistan. Friday saw the third major Taliban bomb attack against an Indian target in Kabul within the last two years. These attacks are not only testing Delhi's commitment to its presence in Afghanistan, but also the resolve of the United States to support India's interests.

India has emerged as an important source of development aid for Afghanistan. It has invested about $1.2 billion in projects to improve roads, communications and medical facilities. Delhi also provides scholarships to Afghan students, assists widows and orphans, and advises the government on improving governance.

India's efforts have an ideological dimension: to strengthen the secular and democratic sectors of Afghan society and to counter the fundamentalist trends spread by the Taliban. They also have a political dimension: to reassert India's pre-1992 role as a traditional ally of Afghanistan. (The Afghan Mujahideen-led government ended this relationship in 1992 with the help of the Pakistani military-intelligence establishment.) Afghanistan's current leader, Hamid Karzai, studied in India as a young man and has embraced Delhi's more activist role.

Both the Taliban and Pakistan oppose this warming relationship. The former sees the revived Indian role as detrimental to its attempts to run the country according to Islamic law. The latter wants to regain its political and military influence in Afghanistan should NATO forces eventually withdraw. Pakistan also blames the Indian presence in Afghanistan—without any evidence—for its increasing internal security problems in the southwestern state of Baluchistan. (These allegations are denied by New Delhi.)

Thus the Taliban and Islamabad have a shared interest in making India bleed in Afghanistan. Friday's attack on two Kabul guest houses and a hotel killed at least 17 people, six of them Indians. The evidence available so far points to the involvement of the Taliban's Jalaluddin Haqqani faction, based in North Waziristan, and the Al Qaeda-linked Lashkar-i-Taiba, based in Muridke. Both groups are closely linked to Pakistan's Inter-Services Intelligence agency. A Taliban spokesmen said the attacks were directed at foreigners.

Pakistan's possible involvement creates a dilemma for India. Friday's attack underlines the vulnerability of Indian nationals working in Afghanistan, despite the induction of Indian security guards and the strengthening of physical security led by Afghan authorities. It is unlikely Delhi will scale back its development programs, especially since the intensified U.S.-led offensive now underway may weaken Taliban insurgents and reduce the Indian vulnerability.

The Obama administration faces an even trickier balancing act. The U.S. has invested blood and treasure in Afghanistan, and has a stake in seeing the war succeed. India's development program is a crucial part of this effort. At the same time, Washington's dependence on Pakistan for its war against the Taliban and al Qaeda makes it amenable to Pakistani pressure. For a start, Islamabad would like Delhi to reduce its diplomatic and consular presence in Afghanistan, which it sees as a direct threat to Pakistan's interests. So far the U.S. hasn't succumbed to this pressure to curb India's program or presence in the country.

Nor should it. India and the U.S. have a common interest in working together to build a sustainable democracy in Afghanistan. The ideological battle of ideas is just as important as the military battles waged on the ground, and in this respect India brings much experience to bear. American and Indian policy makers can't allow Friday's bombing to derail their partnership.

Mr. Raman served in India's external intelligence agency from 1968 to 1994 and on the government of India's National Security Advisory Board from 2000 to 2002. He is currently director of the Institute for Topical Studies in Chennai.

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Friday, February 26, 2010

According to media reports from Kabul, there were at least six Indian fatalities among 17 persons killed by two terrorist attacks in Kabul on February 26,2010. The two attacks were directed against private guest houses patronised by nationals of India, the US and the UK working in Kabul.

2. The Indian fatalities were sustained in a car bomb explosion outside a guest house normally used by Indians working in Kabul. There were two suicide blasts carried out by human bombers outside another guest house normally used by US and British nationals. These blasts were followed by an exchange of fire with Afghan security personnel that lasted about an hour.

3. According to a despatch from the local correspondent of the "New York Times", Zabiullah Mujahid, a Taliban spokesman, said in a claim over the telephone that suicide bombers of the Afghan Taliban targeted two sites in the Shari Now district "where the foreign people are staying." He added: "The actual targets are foreign people."

4. Thus, he did not specify that the Indians were the targets. On October 8, 2009, a suicide car bomber had detonated his vehicle outside the Indian Embassy in Kabul, killing 17 people. Whereas the October 8 blast specifically targeted Indian nationals and was suspected to have had the sponsorship of Pakistan's Inter-Services Intelligence (ISI), the February 26 attack seemed to have been an initiative by the Afghan Taliban meant to convey a message to the international community that the operational capabilities of the Afghan Taliban remained unimpaired despite the current offensive by US-led forces in the Helmand province and the arrests of nearly about 15 Afghan Taliban leaders by the ISI in different cities of Pakistan under US pressure.

5. While there is so far no evidence to show that Indians were exclusively targeted on February 26, the fact that of the two targets attacked by the Taliban one was known to have been the preferred place of stay of Indian nationals would indicate that it wanted to kill and intimidate Indian nationals in addition to other foreign nationals.

6. The fact that the Afghan Taliban has claimed the responsibility for the two attacks should not rule out the possibility of the involvement of anti-India Punjabi organisations such as the Lashkar-e-Toiba (LET) in the attack----- either for orchestrating it or for motivating and facilitating it.

7. Speculative media reports from Kabul have highlighted the fact that the Kabul attacks occurred a day after the meeting of the Foreign Secretaries of India and Pakistan at New Delhi on February 25. There are no convincing indicators of a link between the two.

8. A more relevant and worrisome question for the Indian intelligence will be whether the Kabul attack of February 26 could have been a follow-up to the Pune blast of February 13. The investigation into the Pune blast has not yet made much headway. It has not yet been clearly established who carried it out. The LET is among the suspects. The possibility of a linkage between the Pune and Kabul incidents has to be kept in view during the investigation. If such a linkage ultimately emerges, that would indicate a new jihadi offensive by the LET against Indian nationals and interests not only in India, but also in Afghanistan and possibly in Bangladesh and the Maldives too in the months to come.

9. Our counter-LET strategy has to be given a regional dimension through stepped-up monitoring, intelligence-sharing and operational co-ordination with the intelligence agencies of Afghanistan, Bangladesh and the Maldives. ( 27-2-10)

Thursday, February 25, 2010

At the end of her talks with Mr.Salman Bashir, her Pakistani counterpart, at New Delhi on February 25,2010, Mrs.Nirupama Rao, the Indian Foreign Secretary, projected the initiative taken by India in proposing this meeting as meant to reduce the post-26/11 trust deficit between the two countries as a prelude to a wider dialogue at different levels on the various contentious issues----though not necessarily in the form of a reversion to the composite dialogue process to which Pakistan continues to be attached.

2. Her projection was positive and sought to convey two messages to the Indian audience whom she was addressing. Firstly, India had kept the focus of the meeting largely on terrorism. There were references to other issues such as Kashmir, the river waters, Pakistani allegations relating to Balochistan etc by the Pakistani Foreign Secretary, but these references did not detract from the fact that it was a meeting largely about India's expectations of Pakistani action against terrorism. Secondly, the meeting was the beginning of a process of re-building the trust between the two countries and she kept open the possibility of more such meetings to follow before there was a resumption of formal negotiations between the two countries.

3.This positive picture which emerged from her media briefing was damaged by the media briefing by Mr.Bashir in the Pakistani High Commission, which followed about two hours after her briefing. He and his Government in Islamabad knew by then the way India sought to project the meeting to its own people and to the international community and they were under an understandable compulsion to convince their people that India had not succeeded in keeping the focus of the meeting largely on terrorism as the Indian Foreign Secretary had claimed and that Pakistan had succeeded in giving the meeting a much larger content by raising various other issues.

4. In his understandable attempt to convince his own people that Pakistan had frustrated Indian attempts to keep the meeting confined to a single-issue agenda, Mr.Bashir used language, which was often sarcastic and dismissive and devoid of the politeness and diplomatic finesse which characterised Mrs. Rao's media interaction throughout. He showed a lack of sensitivity to India's concerns on terrorism-related issues except its concern regarding Pakistani action against the Pakistan-based conspirators of the 26/11 terrorist strikes. His media briefing gave an unmistakable impression that while Pakistan was somewhat serious about action against the 26/11 conspirators in Pakistan, it was not prepared to consider other Indian demands relating to action against Hafeez Mohammad Sayeed, the Amir of the Lashkar-e-Toiba (LET), and the Pakistan-based terrorist infrastructure directed against India. Action in specific cases such as the 26/11 terrorist strikes, yes, but action against the terrorist infrastructure, no. That was his clear message.

5. The kind of language used by Mr.Bashir and his ridiculing of many of Indian concerns relating to terrorism have given rise to two questions----Was the meeting worthwhile? Is it necessary to follow it up with more such meetings as India had intended?

6.Mr.Bashir's actions are bound to strengthen the arguments of the skeptics in India who believe in the futility of any dialogue with Pakistan and embarrass those who are arguing otherwise. Instead of contributing to a reduction of the trust deficit, he has strengthened it. The resulting dilemma could be attributed to the over-haste with which the initiative for the meeting was pushed through by the Government of India without wider consultations at the inter and intra-party levels and the failure to work for a certain convergence with Islamabad before the meeting on its format, agenda and the briefing of the media in the two countries even if it was not intended to issue a joint statement.

7. What we had was one meeting, two agendas, two media briefings disseminating two contradictory versions of what transpired and more confusion and distruct after the meeting than there was before it.

8. What are the lessons from the unfortunate experience? Lesson No.1: While anxiety for a dialogue with an adversary such as Pakistan is understandable, over-anxiety for a dialogue and over-haste in organising it could be counter-productve. Lesson No.2: Any meeting at any level---political or bureaucratic--- which is not preceded by careful preparations could prove a meaningless exercise.

9. In spite of what happened at New Delhi on February 25,2010, Mr.P.Chidambaram, our Home Minister, should go ahead with his visit to Islamabad next month to attend the SAARC Home Ministers' conference and his discussions with Mr.Rehman Malik, his Pakistani counterpart, in the margins of the conference to work out a modicum of a mechanism for mutual legal assistance in all criminal cases, including those relating to terrorism. If he succeeds, that could pave the way for a fruitful visit by our Foreign Secretasry to Pakistan in response to the invitation extended by Mr.Bashir.

10. In the meanwhile, it is important for Prime Minister Dr.Manmohan Singh to initiate a process of wider political consulations on our relations with Pakistan in order to convince other political parties that the Government would not sacrifice our core concerns on Pakistan's continued use of terrorism against India to force a change in the status quo in Kashmir while re-starting the dialogue process. His tendency to maintain unwarranted secrecy in such matters and his habit of avoiding wider consultations continue to give rise to an impression that American interests and perceptions are playing a larger than desirable role in influencing our policies vis-a-vis Pakistan. ( 26-2-10)

Wednesday, February 24, 2010

According to data recently released by the US Treasury, China was a net seller of US Treasury Bonds in December,2009.Its sales of some of its bond holdings brought down the total value of its holdings in the US by $ 34.2 billion to $ 755.4 billion. China's share of total outstanding short- and long-term US Treasury securities among foreign holders declined to 20.9 percent in December from 23 percent in mid-2009, yielding its position as the largest investor in US treasuries to Japan.

2. The Chinese sales of December, 2009, which have been interpreted by many analysts as indicating the beginning of a trend to be more cautious in future investments in US bonds, has given rise to two questions. Firstly, was the decision to reduce the holdings a political decision triggered off by developing differences with the US over issues such as the US arms sales to Taiwan and human rights in Tibet or was it a purely economic decision unrelated to political issues between the US and China? Secondly, if it was a purely economic decision were the sales temporary influenced by market conditions of last year or has China decided to reduce its future investments in the US bonds in order to protect itself from any future weakening of the dollar.

3. Chinese analysts have themselves been anxious to point out that it was not a political decision. The sales took place at a time when the Sino-US differences on Taiwan and President Barack Obama’s meeting with His Holiness the Dalai Lama had not come to the fore. According to them, it was a purely economic decision indicative of Chinese nervousness over the strength of the US dollar. The sales seemed to have been the result of an ad hoc decision caused by the then prevailing market conditions and did not indicate a Chinese decision to reduce further its holdings in the US bonds in the months to come.

4. While underlining the need for rationalizing the Chinese investments in the US bonds, some analysts have pointed out the dangers of overdoing the exercise. They have drawn attention to the benefits accruing to China as a result of its holdings in US bonds and to its newly-acquired image as a responsible international economic power, which has been contributing to a re-stabilisation of the global economy, and have advised on the need for caution while re-adjusting its US bond holdings.

5.For some months now, some Chinese analysts have been suggesting that in order to reduce its dependence on dollar assets, China should invest its foreign exchange reserves more in gold, like, according to them, India. There are not many takers for this suggestion. Some have suggested that instead of buying gold as India has reportedly been doing, China should spend part of its foreign exchange reserves for acquiring overseas gold mines and not for buying gold from sources such as the International Monetary Fund.

6. Annexed are extracts from some articles carried by the Government/Party owned Chinese media on this subject.

7. In some of the mushrooming blogs of China, there has been an interesting comparison of the Indian economy with the Chinese economy. Many bloggers, who have been participating in this debate, feel that the Indian economy is now in the same position as the Chinese economy was between 1990 and 1995 when China started attracting investors from the Western countries. Before 1990, the flow of foreign investments to China was mainly from the overseas Chinese in Hong Kong, Taiwan and South-East Asia. According to them, the Chinese economy has presently a lead of 15 to 20 years over the Indian economy, but this lead will ultimately come down due to the following reasons.

8. Firstly, the Indian economy is growing faster and faster, whereas the Chinese growth will soon reach a saturation level. Secondly, while China’s huge lead over India has been in the manufacturing sector, India will forge ahead of China in the services sector. Thirdly, India has been able to develop new centres of entrepreneurship and technological excellence such as Bangalore, Chennai, Hyderabad and Ahmedabad, which are increasingly in the driving seat of the Indian economy. China has not been able to develop similar new centres. The Chinese economy is still driven by traditional centres such as those of Shanghai, Fujian and Guangdong. When the economies of these traditional centres suffer as they did last year due to the fall in orders from the US, the entire Chinese economy suffered. In India, the new centres are able to maintain the momentum even if traditional centres such as Mumbai suffer. ( 25-2-10)

( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. He is also associated with the Chennai Centre For China Studies. E-mail: seventyone2@gmail.com )

ANNEXURE

Extracts from some articles in the Chinese media on Chinese investments in US bonds

“China can reduce its holdings of dollar assets, but should not "overdo" it as the country tries to adjust the structure of its dollar asset-dominated foreign exchange reserves, analysts said. The country's foreign exchange reserves amounted to nearly $2.4 trillion by the end of last year - a third of the global total - raising concerns that the massive scale of the holdings could backfire. About 70 percent of the reserves are dollar assets, according to various estimates by scholars, and the high proportion means that once the dollar's value slumps, China will incur huge losses. But it is equally difficult for China to dump its dollar assets because that could lead to a domino effect on other investors and cause depreciation of China's holdings. "China is in a dilemma," said Dong Yuping, economist at the Chinese Academy of Social Sciences. According to the latest US Treasury International Capital (TIC) data, China was a net seller of US Treasuries in December, cutting its holdings by $34.2 billion to $755.4 billion. China's share of total outstanding short- and long-term US Treasury securities among foreign holders declined to 20.9 percent in December from 23 percent in mid-2009, yielding its position as the largest investor in US treasuries to Japan. "The data suggest that China could be more actively diversifying its currency reserves away from US Treasuries," said Jing Ulrich, managing director and chairman of China Equities and Commodities, J.P. Morgan. "We expect the country might be marginally shifting some exposure to other currencies." While it is not clear that the selling is part of a consistent strategy, the country should keep a "considerable" proportion of dollar assets in its foreign exchange reserves, said Sun Lijian, economist with the Fudan University. "China should not overly reduce its dollar assets, given their high market liquidity," he said. Dollar assets are relatively easy to sell if China needs quick money to safeguard its financial stability, he said. More than a decade after the 1997-98 Asian financial crisis, there are increasing suggestions that China use its growing reserves to buy resources, technologies and attract high-caliber professionals from abroad. While they are important, Sun said, China must have enough reserves available for protecting its financial stability. Asia was dealt a heavy blow during the financial crisis when international speculators attacked the currencies of some economies which did not have adequate reserves, plunging them into a spiral of currency depreciation, economic contraction and social chaos. Since then, Asian countries have paid great attention to increasing foreign exchange reserves; and now, they account for seven of the top 10 nations. As China's reserves grow, however, concerns are also growing that they could invite speculative capital inflows, especially when the country's economic recovery is quicker than in other regions. Once the capital flows out of the country, there will be shocks to the domestic market and the economy, Sun warned. To address the problem, China must quicken its pace of balancing domestic demand and exports as it strives to stimulate consumption as a major engine of economic growth, said Dong.”

----From the “China Daily” of February 22,2010

”China's decisions on its holdings of United States Treasury bonds should be based on its accurate market judgments, not on opinion-swaying proposals by some nationalistic academics. China slashed its holdings of US bonds to $755.4 billion in December from $789.6 billion the previous month, the lowest level since last February, according to recent US Department of Treasury data. The latest $34.2 billion reduction, or 4.3 percent, was the fifth time that China cut down its US national debt last year. It brought down the proportion of the US bond holdings in China's foreign reserves from 37 percent at the end of 2008 to 33 percent in late last November. The biggest decline in US Treasury bonds holdings since August 2000 also allowed Japan to regain its position as top holder of American government debt after a 15-month absence. Japan's holdings increased to $768.8 billion in December from $757.3 billion the previous month, according to the US Treasury Department data. Other US creditors such as the UK, Russia and Brazil have also increased their holdings of US debt. When China's foreign reserves expanded rapidly in recent years, different and even conflicting voices arose within the country about how best to utilize the reserves. Some scholars proposed that the Chinese government should use its ever-expanding reserves as a forcible card to deal with Washington, some believed that the reserves should be used to purchase gold and oil to change China's previous US debt-dominant investment model. Some even suggested that the government should threaten to slash its holding of US bonds if the US administration stubbornly keeps turning a blind eye to China's reactions to the US sale of weapons to Taiwan. In a democratic and academically diversified society, everyone is entitled to express his or her viewpoints, even prejudiced opinions, on national issues. But decision makers should remain particularly cautious and level-headed about whether or not these viewpoints will influence their decision-making on significant issues. In a dollar-dominant international financial order, it is ideal for China to hold US Treasury bonds as one important way to safeguard its bulk of foreign reserves. Despite growing dissatisfaction among the international community about the current global financial structure, the time-honored system is not expected to collapse and be replaced in the near future. What China should now do is try to maintain and maximize its national interests and refrain from breaking away from the old global financial system. Provided that the current financial system will not change, and the dollar will remain the world's leading currency, China would face lesser risks if it chooses to hold dollar-denominated assets. The value of a country's currency is built on its national competitiveness. The financial crisis in 2008 has indeed brought enormous trauma to the US and plunged the world's largest economy into a full recession. But no single country in the world has so far become powerful enough to match the US in terms of economic strength. As the world's sole superpower, the US' well-developed educational system, its strong innovative abilities in technology and finance, along with its legal, judicial and political frameworks, are all expected to help Washington continue to hold the world's leading economic position in the coming decades. Thus holding dollar-denominated properties would mean smaller financial risks for a holding country, especially in the era of economic and financial globalization in which turbulences in the global market are expected to arise from time to time. China's success in keeping its enormous foreign reserves from suffering much in the latter half of 2008 can serve as a convincing example. When the global financial crisis struck at that time, the country's reserves avoided a heavy loss because it heavily invested in US government debts in sharp contrast with about 30 percent losses in other financial markets. If holding dollar-denominated assets is believed to be a high-risk move, then the question would be: How can China place its reserves at a lower risk in a world with an accelerated economic and financial globalization? Some believe investment diversification can serve as an effective way to reduce a country's overseas investments. Diversifying a country's investments would possibly help lower risks, but where can China invest now that it has a large volume of foreign reserves? Purchasing such properties in kind as gold and oil is possibly not a bad choice, as some expected, but this is no different from investing in financial products in a world where financial, futures and currency products have dominated almost all investment sectors. But the scenario can't be ruled out that a country at times deploys its reserves as a political chip when struggling to develop ties with another nation. Yet the hard-won wealth China has managed to obtain until now should be handled mainly according to market principles, rather than ideological factors. In so doing, the country will be able to effectively reduce risks for its foreign reserves and maintain the value of its colossal overseas assets.”

----From an article by Xi Xianrong, a researcher with the Institute of Finance and Banking under the Chinese Academy of Social Sciences, published by the “China Daily” of February 22,2010.

”China trimmed its holding of U.S. debt by 34.2 billion U.S. dollars or 4.3 percent to 755.4 billion dollars in December last year, whereas Japan boosted its holdings of U.S. Treasuries by 11.5 billion dollars to 768.8 billion dollars in December 2009 to outpace the former as the largest holder of U.S. Treasury securities, according to the Treasury International Capital (TIC) report released on Feb. 12, and the foreign holding of U.S. Treasury securities fell by 53 billion dollars in the month. This new trend, however, has attracted widespread attention globally, as China is still a big holder of U.S. debt bonds, which currently owns 10 percent of the total U.S. Treasury securities in circulation. From a business investment point of view, the timing for China's substantial reduction of its holding of U.S. security bonds is appropriate. The nation has made a correct choice to cut its U.S. debt holding at the time when there is a rising demand for hedge dollar due for a technical demand. Of late, the euro slid to a nine-month low against the U.S. dollar. Greece's debt binge and the short-term sovereign debt crisis in several nations of the euro zone has led to a drastic slump in the value of euro and pushed up the U.S. dollar's rally. Thanks to an increasing demand for U.S. treasury hedge and in view of a technical rebound for the U.S. dollar, it is a right, opportune time to sell the US dollar. This represents an especially-correct investment strategy for China, which now has a large amount of U.S. treasury securities. China has sold merely 4.3 percent of its U.S. dollar-denominated assets. As a matter of fact, the amount of Treasury securities it has cut is still limited. So, it has neither negatively affected the dollar's exchange rate price nor meted out a telling blow to the U.S. dollar. This has precisely shown the reduction of China's holding of US security bonds is quite modest and moderate. U.S. dollar has kept showing a bearish trend on a long run. After the onset of the global financial crisis in 2008, the U.S. debt levels, instead of being trimmed by a big margin, have further expanded from the private sector into the public sector. The size of the American government's debt and budge deficit, presently under constant expansion, can only be emergency rescued by the issuance of U.S. dollars, which would certainly lead to the devaluation of the dollar-denominated assets and subsequently cause creditors to drastically contract the dollar-denominated assets in their possession. At present, the U.S. government's total debt amount has surpassed the 12 trillion dollars mark, constituting approximately 90 percent of its gross domestic product (GDP). The U.S. government budget deficit is expected to top record 1.56 trillion dollars at least in the fiscal year 2010, or about 10.6 percent of its GDP, with its debt limits rising to a historic 14.3 trillion dollars in the post-World War II era. In this context, the Chinese government, out of its consideration for the maintenance of the reserve security and appreciation, has worked out the policy to slowly expand or reduce U.S. debt. Hence, it is a rational choice proceeding from the perspective of its own economic and financial interests, which should not be read and mulled over excessively. In fact, the increased size of U.S. dollar-denominated debt and fiscal deficit has triggered growing concerns of the international community. India trimmed its holding of U.S. debt by 1.3 billion dollars in November last year and, in December 2009, Russian Federation also cut its holding by 9.6 billion dollars. The U.S. debt issuance rose four-fold in 2009 than in the preceding year, as the latest research findings have reportedly indicated. But in years prior to 2009, foreign counties subscribed almost 100 percent of the U.S. treasury securities and, since early 2009, however, this "main force" had only bought less than one third of U.S. treasury securities. An extremely embarrassing situation that has been emerged is that almost all global investors have been caught in the U.S. dollar "kidnapping" dilemma or impasse. To date, nevertheless, not a single currency has so far been able to replace the U.S. dollar's status and the American treasury debt bonds remain a good investment channel for countries worldwide. In a short term point of view, China's current holding of U.S. Treasury bonds does not mean to forsake the country's investment in U.S. dollar-denominated assets. This is because, if China scales down or continues to substantially sell out bonds within a short time, it could cause an adverse effect to the dollar assets. In the long run, China's foreign exchange (Forex) reserve needs to be further optimized, and there is also a need to gradually cut the dollar-denominated assets in a bid to diversify Forex assets, but this is perhaps a prolonged and gradual process. In a nutshell, the reduction or diversification of investment is merely the means to "symptoms", and the way for genuinely resolving the real issue is the fundamental solution to the irrational internal and external imbalance of Chinese economy. So, this requires China to accelerate the pace for its economic restructuring toward a basic balance in the international payments and to avoid a substantial increase in Forex reserve. In the meanwhile, China should speed up the pace for internationalization of the Chinese currency RMB (or Renminbi), reduce its demand for the U.S. dollar and the ratio of U.S. dollar to its payment surplus, so as to alleviate an increasing economic pressure resultant from the pressure of the country's external imbalance.”

---- From an article by Prof. Shi Jianxun, a noted economist, published by the “People’s Daily” on February 23,2010.

”Contrary to speculation China may not buy the International Monetary Fund's (IMF) remaining 191.3 tons of gold which is up for sale as it does not want to upset the market, a top industry official told China Daily Tuesday. "It is not feasible for China to buy the IMF bullion, as any purchase or even intent to do so would trigger market speculation and volatility," said the official from the China Gold Association, on condition of anonymity. He said China would continue to shore up its gold reserves by acquiring gold mines abroad rather than purchases on the international market. Some analysts had earlier said China would purchase the IMF gold in an effort to diversify its dollar asset-dominated foreign exchange reserves. According to estimates, over 70 percent of China's $2.4 trillion foreign exchange reserves are in dollar assets. The IMF said last week that it would expand its bullion sales to the open market. Central banks from India, Mauritius and Sri Lanka had purchased 212 tons of the yellow metal from the institution last year. Zhu Baoliang, a researcher at the State Information Center, said China would not hike its gold reserves given the limited quantity available on the market. "Gold is only a small portion of the nation's reserves," he said. According to the State Administration of Foreign Exchange, China held nearly 1,054 tons of gold reserves as of April last year, a value that equals 1.2 percent of the nation's gross domestic product, but still far below the world average of 10 percent. Gao Rukun, a researcher at Beijing Gold Economy Center, said that such a percentage is far too low and China should increase its gold reserves to 1,800 tons by 2014. However, Asian Development Bank economist Zhuang Jian noted that buying IMF gold would not only help China diversify its foreign exchange reserves but also strengthen the yuan as an international currency. Zhuang said China could have a bigger say in the IMF through the gold purchasing deal. "China can start with small purchases on the international market like the 191.3 tons of IMF gold. In the short term, the market will see volatility, but in the long term the prices will return to normal." Gold gained 24 percent last year after hitting a record high of $1,227.50 an ounce in December as a weaker dollar boosted demand for it as an alternative investment. China has been the world's largest gold producer since 2007 and surpassed India as the world's top gold consumer in 2009 .”

In a despatch dated February 23,2010, from Tehran,the State-owned Xinhua news agency of China has reported as follows: "Abdolmalek Rigi, the leader of the Pakistan-based Iranian Sunni rebel group Jundallah ( also spelt as Jondollah), has been captured, Iran’s English-language satellite channel Press TV reported Tuesday (Feb.23). Rigi was reportedly captured on a flight from Dubai, the United Arab Emirates, to Kyrgyzstan, Press TV said. Iranian Interior Minister Mostafa Mohammad Najjar was quoted by Press TV as saying that Rigi was arrested outside the country as he was preparing for a new act of sabotage and was consequently transferred to Iran. According to the official IRNA news agency, Najjar said Rigi was arrested during an operation with the cooperation of military, security and Information Ministry forces. The detention of Rigi followed several months of extensive works of the forces, which were determined to arrest him alive, Najjar said. Rigi was an agent of foreign countries and operated their plans and conspiracies, he added. Jundallah, or People's Resistant Movement of Iran, is an insurgent Sunni Islamic organization based in Balochistan of Pakistan that claims to fight for the rights of Sunni Muslims in Iran. The group was founded by and had been under the command of Rigi. It has been identified as a terrorist organization by Iran and Pakistan and has been behind numerous acts of terror, kidnapping and smuggling narcotics. In August, Abdolhamid Rigi, the brother of Abdolmalek Rigi, told reporters in Zahedan, the capital city of Iran’s southeastern province of Sistan- Balouchestan, that the United States had a supporting role in launching terrorist plots inside Iran. “After meeting with the U.S. officials in the U.S. embassy in Pakistan four years ago, they (the U.S. officials) promised to help us with everything we needed,” said Abdolhamid Rigi, who had been captured by Pakistani forces and extradited to Iran. “We were deceived by them (the U.S. officials) … We received monetary and armed supports from the United States … We received orders from them to carry out the terrors inside Iran, he said.” ( My comments: Abdolhamid Rigi made these allegations to the media after he had been convicted on a charge of treason and sentenced to death. The death sentence has not been carried out till now)

2.The Arabic language channel al-Alam said Abdolmalek Rigi has been held in eastern Iran, but gave no more details. The semi-official Fars news agency, quoting the Iranian intelligence ministry, said the Jundallah leader was arrested along with two of his group members. The official IRNA news agency said he had been flying to an Arab country via Pakistan before his arrest. The AFP (Agence France Presse) quoted an Iranian official as saying: "His plane was ordered to land and then he was arrested after the plane was searched." Press TV said Rigi had been in a US military base in Afghanistan 24 hours before his capture. It alleged the US had issued Rigi with an Afghan passport. It also said he had recently travelled to "European countries". The Press TV quoted the Iranian Intelligence Minister Heidar Moslehi as saying at a media briefing that Rigi had contacts with the US Central Intelligence Agency (CIA) and the Israeli foreign intelligence service Mossad, and that he had even met NATO military chief Jaap de Hoop Scheffer in Afghanistan in April 2008. He claimed that Rigi’s movements were being monitored for five months before he was captured and that no foreign intelligence service had helped Iran in Rigi's capture.

3.It was not immediately clear as to how the Iranian authorities were able to seize Rigi from the flight between Dubai and Kyrgyzstan. But an official at the Manas airport in Bishkek in Kyrgyzstan was reported to have told AFP on condition of anonymity that the plane was forced to land. “While over the territory of Iran a flight from Dubai to Bishkek with 119 passengers onboard was forced to make an emergency landing by military bomber aircraft,” the official said, adding that “a number of foreign passengers were forcibly removed.” In a statement on its blog junbish.blogspot.com, the Jundallah confirmed Rigi’s arrest and alleged as follows: “The leader was arrested with the help of the CIA, and Afghan and Pakistani intelligence services.” The Iranian Intelligence Minister accused the Dubai authorities of collusion with the CIA and the Mossad by allowing Rigi to come to Dubai. He showed the media personnel photographs of Rigi whichj, he claimed, had been taken inside a US military base in Afghanistan by Iranian agents.

4.In an Islamabad datelined report, the “Dawn” of Karachi reported as follows: “ Arrest of Jundallah leader Abdolmalek Rigi and his deputy Hamza during a flight from Dubai to Kyrgyzstan marks a lucky break for Pakistan, which has been long accused by Iran of hosting the terror group’s ringleader, and offers an opportunity to ease the tense relations between Tehran and Islamabad. Iran, despite repeated denials by Islamabad, always alleged that the group operated from Pakistan’s soil and that its leader Rigi was based there and carried Pakistan’s national identity card by the name of Saeed Ahmed, son of Ghulam Haider. The militant leader had been educated at Karachi’s Binnori Town seminary, which was school to many of the Taliban leaders. Rigi is believed to have camouflaged his nationalist movement in a sectarian colour to curry favour with Pakistani sectarian groups. Iranian Interior Minister Mostafa Mohammad Najjar, who visited Pakistan in October following an attack on elite Revolutionary Guards in south-western Sistan-Balochistan province along Pakistan’s border, is said to have handed over proofs of Rigi’s travel to Pakistan. “We have documents that show (Abdolmalek) Rigi travels readily to Pakistan ... we are here to ask Pakistan to hand over Rigi to Iran,” Mr Najjar had said in a statement. Bilateral relations between the two countries had been on the slide ever since the group was formed in 2002 and stepped up cross-border raids out of their havens along Pakistan-Iran border targeting Iranian security personnel and civilians. In view of enhanced Iranian concerns, Pakistan had offered Tehran with increased intelligence sharing and intensified border patrolling. Pakistan had been insisting that Rigi was not in Pakistan and Jundallah operated in ‘triangle region’ between Afghanistan, Pakistan and Iran making it harder to act against the group. The 1,000 km stretch between Pakistan, Iran and Afghanistan is a rough terrain making patrolling extremely difficult. Extradition of Abdolmalek Rigi’s brother Abdolhamid Rigi by Pakistani authorities to Iran in June 2008 was the highlight of cooperation between the two countries on the contentious issue of Jundallah. National Assembly Speaker Fehmida Mirza, during her recent trip to Tehran, had disclosed at a meeting with Iranian Foreign Minister Manouchehr Mottaki that a number of Jundallah militants were arrested in Pakistan and extradited to Iran. Iran had always alleged that Jundallah was financed by the US government to destabilise their country. Investigative journalist Seymour Hersh revealed in another report in July 2008 that US Congressional leaders had secretly agreed to former President Bush’s $400 million funding request, which gave the US a free hand in arming and funding Iranian terrorist groups such as Jundallah militants.”

5.General Noor Ali Shooshtari, the national Deputy Commander of the ground force of Iran's Revolutionary Guards (RG), the Guards' chief provincial commander, Rajab Ali Mohammadzadeh, and four other senior officers of the RG were among 31 persons killed in a suicide attack in the Pishin region of Iranian Balochistan known as Sistan-Balochistan on October 18, 2009. The RG officers had gone to the area on a routine inspection tour during which they were having a discussion with representatives of the local Baloch community when a suicide bomber struck. Some reports spoke of two suicide bombers. One reportedly managed to get into the venue of the meeting. The other blew himself up at a vehicle carrying some Revolutionary Guards outside the venue.

6.Earlier, 30 persons were killed and over 180 injured on May 28, 2009, in a suspected suicide bomb blast at the Amir-al Momenin Shia mosque in Zahidan, the capital of Iranian Balochistan. It is the second largest Shia mosque in Zahidan. Mainly Shia Government servants and members of the security forces pray there. Three persons were injured on May 29, 2009, when unidentified gunmen attacked the election office of President Mahmoud Ahmadinejad at Zahidan. On May 31, 2009, there was an exchange of fire between groups of Shias and Sunnis in different parts of Zahidan following an unsuccessful attempt by unidentified persons to kill Mulla Abdol Hamid, a senior Sunni leader. While he survived the attack, many of his body guards were reportedly injured.

7. Following these incidents, the Iranian authorities announced the execution of three Balochs on a charge of involvement in the explosion of May 28. Baloch sources, however, maintained that these persons were already in police custody and had been arrested before the explosion. Hence, they contended, these persons could not have participated in the explosion as alleged by the Iranian authorities.

8. The province of Sistan-Balochistan has around 3.5 million Balochs, the majority of them Sunnis. The province has been the scene of frequent incidents of violence unconnected with the liberation struggle being waged by the Balochs in Pakistan's Balochistan province for over three years now. There are close ethnic and religious links between the two Baloch communities on both sides of the Pakistan-Iran border. Iranian Balochistan also has a common border with Afghanistan.

9.The responsibility for the violent incidents in Iranian Balochistan in the past as well as for the latest one on October 18, 2009, were claimed by the Jundallah which projects itself as the People's Resistance Movement of Iran and not as the People's Resistance Movement of Sistan-Balochistan. It has no links with any of the Baloch nationalist organisations in the Balochistan province of Pakistan. In the past, there were reports of its having links with the anti-Shia Sipah-e-Sahaba and Lashkar-e-Jhangvi of Pakistan. In the 1990s, there were reports that a major explosion in the province was organised by Ramzi Yousef, who is now undergoing imprisonment in the US for his involvement in the attempt to blow up the World Trade Centre in New York in February, 1993. The Jundullah seems to be more a Sunni extremist than a Baloch nationalist organisation.

10. A statement attributed to Jundallah after the May 28 attack said: " The authorities have blamed the US for hiring terrorists who carried out the suicide bombing. Jundallah categorically rejects this claim. It does not have any kind of relationship or any kind of support from the US or any other country. This action was in response to systematic and regular insults to the beliefs of Sunni Muslims in Iran and wide discrimination against the Baloch people. We reject the Government’s claim that we are a terrorist organization. We are a defensive organization and act according to international law of self-defence by the same strategy and equipments the Iranian governments are using against us. Several religious leaders and hundreds of Baloch youth have been killed or hanged by the Islamic Republic of Iran just for their beliefs after severe and long torture. The Islamic Republic of Iran has destroyed several Sunni mosques and has hanged several top religious leaders of Sunni people in Iran."

11. A statement of July 23, 2009 by the Jundallah said: "The Islamic regime hanged 13 young Baluch political activists on 14 July to create a sense of fear among the public. The Baluch people have been in the vanguard of the political campaign against the Islamic Republic of Iran that conducted the biggest fraud in election in the history of Iran and the world. The resistance of Baluch people became a great source of inspiration for other people of Iran to express their discontent about the fraudulent elections and other injustices in the form of demonstrations and huge marches......At the same time, the Government of Pakistan extradited one Baluch who was in prison for some time to the Iranian regime, knowing that he will be tortured and executed. The Pakistan Government under Musharraf extradited a group of Baluch opposition to the Government of Iran and all of them were tortured and executed later. The Baluch people are Sunnis and they have been subjected to discriminatory policies. Baluchistan has the highest poverty rate and according to all international and United Nations research, is the poorest province of Iran. According to official figures, poverty rate in Baluchistan is over 76 per cent. The Baluch students are not admitted into universities on an equal basis and on merit. While the Islamic Republic of Iran has given more than a million scholarships to Iranian students to study abroad or in the top Iranian universities, only three Baluch students have been awarded scholarships. The Baluch people are under daily threat and a security environment has been imposed in Baluchistan. Everybody is a suspect and the security guards shoot the Baluch people with total impunity. Although hundreds of Baluch people have been killed in the streets of Iran, not even one single agent has been tried in the court. Baluchistan is in the vanguard of the freedom seeking people of Iran and will never stop its campaigning until a democratic regime is established in Iran."

12. In an earlier statement of July 14,2009, the Jundallah said: "The young Baluchs (executed on July 14) have been forced to accept that they have been agents of CIA. They were campaigning for the legitimate rights of the Baluch people who are Sunnis in a majority Shia country. The Baluch people have been systematically oppressed since the beginning of the revolution for seeking equality of rights and opportunities with other Iranians. According to the constitution of the Islamic Republic and other laws that have been passed by Iranian parliament, the Sunnis are prohibited from becoming supreme leader, president, minister, deputy minister, army general, ambassador, or any other high official. The official religion of the state has been declared Shiism which is a radical opponent of the Sunni people."

13. The Iranian authorities have been projecting the Jundallah as a surrogate of the US intelligence operating from sanctuaries in Pakistani territory. They have been alleging that the periodic terrorist strikes in Iranian Balochistan are being mounted from Pakistani territory. While they accuse the Pakistani authorities of inaction against the anti-Iranian Sunni elements operating from Pakistani territory, they have never accused the Baloch nationalist organisations of Pakistani Balochistan of backing the Jundallah. They have been suspecting the Lashkar-e-Jhangvi (LEJ), the anti-Shia organisation of Pakistan which is allied with Al Qaeda, to be training the suicide bombers of the Jundallah.

14.Some of the statements attributed to the Jundallah are disseminated from London. This has created some suspicion in the minds of the Iranian authorities that the UK is also probably backing the Jundallah in its anti-Teheran activities.

15. The capture of the Amir of the Jundallah is a major blow to this organisation. With the two brothers who were the moving spirit of this organisation now in the custody of the Iranian authorities, the organisation has definitely suffered a set-back at least temporarily. But the anti-Shia and anti-Tehran anger in Sunni Sistan-Balochistan is so intense and so widespread that it is only a question of time before a new leadership emerges. Ant-Shia organisations of Pakistan such as the LEJ would also see that the anti-Shia movement in the Sunni majority frontier areas of Iran is kept alive. ( 24-2-10)

Tuesday, February 23, 2010

Mrs.Nirupama Rao, India's Foreign Secretary, and her Pakistani counterpart Mr. Salman Bashir will be meeting at New Delhi on February 25,2010, under a face-saving formula which would enable both the Governments to claim that the respective stand taken by them after the 26/11 terrorist strike in Mumbai stands vindicated by this meeting.

2. The Indian stand was that the formal composite dialogue on various bilateral issues including Pakistani claims to Jammu & Kashmir, which was suspended by New Delhi after the terrorist strike, cannot be resumed unless and until Pakistan took effective action against the Pakistan-based conspirators of the 26/11 attacks and the terrorist infrastructure of the anti-India terrorist organisations , particularly the Lashkar-e-Toiba (LET), which orchestrated the 26/11 terrorist strikes.By circumventing, with US backing, the Pakistani demand for a formal resumption of the composite dialogue and by seeking to keep the meeting between the two Foreign Secretaries confined to a discussion on the action taken by Pakistan against terrorism, India can claim that its position on the composite dialogue remains unchanged.

3.The Pakistani stand was that progress on action against terrorism should not be tied to the composite dialogue and that terrorist acts should not be allowed to come in the way of the composite dialogue. By insisting, again with US backing, that while it was prepared for a face-to-face meeting under the format proposed by India, it reserved to itself the right to raise during the meeting issues other than terrorism such as Kashmir and its allegation of Indian non-adherence to past agreements on the sharing of river waters, Islamabad can claim that it has not relented from the position taken by it after 26/11.

4.The result will be one meeting on February 25 with two agendas----- with each Foreign Secretary sticking to his or her own agenda while not disallowing the agenda of the other. Since this is unlikely to produce any meaningful results, there has been an understanding in advance of the meeting that there will be no joint statement and no joint media briefing. Each Foreign Secretary will give to the media of his or her country his or her version of the discussions.

5. Pakistan is not going to face any dilemma because it has always been its stand that the continuance of the composite dialogue should not be tied to India's satisfaction over the action taken by it against terrorism. Action on terrorism and the dialogue on other contentious issues should move simultaneously without the one being made conditional on the other.

6.The Government of Mr.Atal Behari Vajpayee had insisted on this linkage and made Gen.Pervez Musharraf accept it when the two met in Islamabad in January 2004.Mr.Vajpayee agreed to the composite dialogue in return for Musharraf's commitment that Pakistan would not allow any territory under its control to be used for acts of terrorism against India. This linkage came in the way of Pakistan continuing to use terrorism as a strategic weapon against India to bring about a change in the status quo in Kashmir. Shortly after Mr.Vajpayee pressured the General to accept this linkage, his party lost the election and a Congress-led coalition headed by Dr.Manmohan Singh came to office.

7. Since then, the Pakistani Governments----first the one headed by Gen.Musharraf and then the present one headed by President Asif Ali Zardari--- have been trying to wriggle out of this linkage without meeting much resistance from Dr.Manmohan Singh. In the attempt to wriggle out of this linkage, Musharraf scored Pakistan's first success at his meeting with Dr.Manmohan Singh at Havana in September 2006, and Prime Minister Yousef Raza Gilani took this success further at his meeting with Dr.Manmohan Singh at Sharm-el-Sheikh in July,2009, at which Dr.Manmohan Singh practically conceded Pakistan's point of view that there should not be any linkage.

8. The furore in India, including in sections of his own Congress (I), over his perceived concessions to Mr.Gilani and over his not resisting a reference to Pakistani allegations regarding India's role in Balochistan in the joint statement, made the Sharm-el-Sheikh agreement a non-starter. Dr. Manmohan Singh wriggled out of the Sharm-el-Sheikh agreement not because he realised that he was wrong to have conceded Pakistan's point of view, but because he was taken aback by the public outcry against the concessions made by him to Pakistan.

9. As the two Foreign Secretaries meet, the question that assumes importance is whether Dr.Manmohan Singh will now try to restore the linkage between Pakistani action against terrorism and progress in the composite dialogue on other issues. One can hope for India insisting on the restoration of this linkage only if one sees signs that Dr.Manmohan Singh has now come to be convinced that such a linkage is necessary.

10. One sees no such sign. The opposition parties and those critical of Dr.Manmohan Singh's soft attitude towards Pakistan's inadequate action against anti-India terrorism should insist that the composite dialogue should not be resumed unless and until this linkage established in January 2004 is restored.

11. The continued absence of the composite dialogue need not necessarily mean the absence of political and official interactions on other issues of importance such as mutual legal assistance between the investigating agencies of the two countries, transit trade between India and Afghanistan through Pakistani territory, normalisation of bilateral trade etc. Expanding the network of official level contacts on issues unconnected with terrorism and maintaining our insistence on the linkage between Pakistani action against terrorism and resumption of the composite dialogue should be our objective. ( 24-2-10)

Direct military action against a State-sponsor of terrorism waging a proxy war against us by using terrorism through surrogates as a low-cost weapon without the direct involvement of its Armed Forces would be counter-productive and messy.

While there could be no doubt about India's ultimate success in a military conflict, the final cost of the conflict would further retard India's economic development.

Direct military action should be a weapon of last resort when there is no other way of protecting our unity and territorial integrity. We are far, far away from such a desperate situation.

Despite its strong anti-Castro rhetoric, the US has generally avoided any direct military action against Cuba which it has, in the past, accused of sponsorship of terrorism or insurgency in Latin America because of concerns that such action could lead to a messy situation at its door step. What it can afford to do to far-away Libya or Iraq or Afghanistan, it cannot to its across-the-sea neighbour.

Avoidance of direct military action against Pakistan is dictated by its being our next-door neighbour, the suspected presence of irrational elements in its military, intelligence and scientific establishment and the concerns of the international community over the nuclear factor. India has a common interest with the rest of the world in ensuring that Pakistan's nuclear and missile arsenal does not fall into the hands of irrational elements.

Public and political opinion should refrain from creating a situation similar to the one created before 1962 when the clamour for a macho response to China's nibbling at our territory led to unwise decisions.

To talk of limited military action in the form of hot pursuit of terrorists, hit and run raids and air strikes on their training camps in Pakistani territory is to exhibit a surprising and worrisome ignorance of ground realities and a lack of understanding of a proxy war despite India being a victim of it for nearly three decades now.

Legally, India has the right of hot pursuit, but it works only when armed groups indulge in hit and run raids from rear bases in a foreign territory across the border. It cannot be used against suicidal squads of foreign mercenaries operating from safe sanctuaries in our territory provided by alienated elements in our own population.

Destruction of training camps would be a meaningless exercise because terrorists do not have a permanent training infrastructure like Khadakvasla or Dehra Dun or West Point. Their infrastructures are improvised and shifting and come into life whenever they manage to get a sufficient number of recruits for training.

The US bombing of the training camps in Afghanistan in August 1998 did not prevent the attack on a US naval ship in Aden in October, 2000 or the terrorist strikes of September 11,2001, in the US.

When terrorism is used by a State as a low-cost weapon to achieve its strategic objective, what works against it is the ability and the determination of the victim State to hurt the interests of the State-sponsor in order to make it a high-cost weapon for the wielder.

State-sponsored terrorism withers away when the villain State is made to realise that it will have to pay a heavy price for its sponsorship. The US bombing of Libya in 1986 and its economic sanctions against it produced more enduring results than its bombing of the training camps in Afghanistan in 1998 because it hit at the vital interests of the State-sponsor (Libya); whereas in Afghanistan, it hit only at the training camps without hurting the Taliban-run State.

The ideologically-oriented terrorist groups of West Europe, including many inspired by Carlos, withered away after the collapse of East Germany, the erstwhile USSR and Yugoslavia and the US pressure against Syria, Yemen and Sudan deprived them of any State-sponsor.

Egypt was able to control the activities of the Al Gama Al Islamiya and other similar groups only after the US pressure on the Sudan deprived them of sustenance from the Sudanese State.

If Pakistan-sponsored terrorism against India is not abating, it is partly because of the reluctance of the US to exercise similar pressure on it and partly because of our unwillingness and inability to make the State of Pakistan pay a price for its sponsorship. When a puppeteer uses puppets to hurt you, you have to disable the puppeteer; otherwise, the more the puppets you destroy the more the number that will crop up.

Other options, which need to be tried first before even contemplating the direct military option, are political, economic and non-military covert actions. The political option relates to intensifying our pressure on the international community in general and the US in particular to act against Pakistan. The US is as opposed now as it was in the past to calling Pakistan to order, but one could see from the US media that growing sections of public opinion there do not take as benign a view of Islamabad as the Administration does. One must take advantage of this wind of change.

India has a much stronger case against Pakistan than the US has had against the Al Qaeda and the Taliban. We have had difficulty in selling our case because of the USA's strategic interest in Pakistan and the nostalgic links of the military-intelligence establishments of the two countries.

It would, therefore, be unrealistic to expect the US to come down on Pakistan heavily. We cannot expect more than proforma admonitions addressed to Islamabad. However, this should not be an argument for not keeping up our diplomatic pressure to confine Pakistan to the dog house.

Islamabad will not give in as easily to US pressure vis-a-vis India as it did apropos Afghanistan. In its perception, the proxy war has brought it very close to its objective of a change of status quo in J & K. It thinks that if it relents in the proxy war in response to US pressure, it may not get for decades a similar opportunity to change the status quo. In its eyes, keeping the Indian security forces preoccupied with internal security duties is also meant to neutralise the quantitative and qualitative advantage enjoyed by the Indian military.

The only way, short of a military conflict, of making it relent in its proxy war is by making the perceived low-cost weapon into a high-cost one. Economic warfare, through overt and covert means, could be one way of doing this. However, such economic warfare would have produced better results before 9/11, but today its cash flow position has improved due to continuing flow of US money. And yet, sustained economic warfare could neutralise the reprieve which the Pakistani economy has gained since 9/11.

Political, diplomatic and economic actions by themselves would not make Pakistan relent unless simultaneously accompanied by hard-hitting covert actions directed at Pakistan's neurologic spots carefully identified. A covert action is defined as a clandestine and deniable action, armed or unarmed, not involving the use of the Armed Forces, which a State undertakes in a situation where the use of the conventional diplomatic or military option is considered as not feasible or advisable.

Successful covert actions demand the required professional capability in the intelligence community, objective allies in the targeted territory and consistency on the part of the political leadership in their implementation.

Consistency in our policy towards Pakistan has not been a hallmark of our national security management. It must be said to the credit of Pakistan's military-intelligence establishment that it has exhibited remarkable consistency in its hatred of India and in its urge to hurt us wherever and whenever it can.

Our policy of "kabi garam, kabi naram" (sometimes hard, sometimes soft) creates confusion and uncertainty in the minds of our own security bureacracy and makes our objective allies across the border hesitant to co-operate with us in covert actions.

The need of the hour is a counter proxy war doctrine incorporating its political, diplomatic, economic and covert components and its implementation in a determined and consistent manner. The results would not come dramatically, but slowly and almost imperceptibly.

The starting point of any exercise to work out a counter proxy war doctrine has to be the answers to two questions---- is it in our national interest to make Pakistan pay a prohibitive price internally and externally for using terrorism against India? If so, how to do it in a manner which will be effective and deniable?

Once we have affirmative answers to these questions, many options will suggest themselves. Inaction or unwarranted generosity will be suicidal against a determined and cunning adversary such as Pakistan.

Our intelligence agencies are not strangers to covert actions. They have had instances of successes and instances of failures. 1971 was the successful culmination of a covert action initiated 20 years earlier. The defeat of the Taliban in Afghanistan in 2001 by the US was facilitated by a covert action initiated by India some years earlier. These were not acts of terrorism. These were intelligently-conceived operations executed with stealth and consistency.

The very same political leadership, which ordered the winding-up of our covert action capability vis-a-vis Pakistan in a moment of misplaced generosity in 1997, ordered the continuance of the capability directed against the Taliban, which ultimately paid results in 2001.

If our political leadership and people bestow confidence in our agencies, give them a consistent goal and the wherewithal to achieve that goal, they are capable of producing results.

Unfortunately, the present leadership lacks in the will to prevail against a determined adversary and in self-confidence that it can stand up to pressure from the US if our leadership takes a tough line against Pakistan. Public opinion has to assert itself. ( 23-2-10)

Sunday, February 21, 2010

Sources in the Muttahida Qaumi Movement (MQM), the party headed by Mr.Altaf Hussain, who lives in political exile in the UK, have been alleging for some months now that many leaders of the Afghan Taliban have shifted from Quetta in Balochistan to Karachi and that, similarly, the absconding leaders of the Tehrik-e-Nifaz-e-Shariat-e-Mohammadi (TNSM), including its Amir Maulana Fazlullah, have shifted from the Swat Valley to Karachi.

2. Their allegations were not taken seriously till now by US officials. Those allegations were attributed to the MQM's political tussle with the Awami National Party (ANP), which enjoys the support of the majority of the Pashtun community of Karachi, and dismissed as motivated by this political rivalry.

3. However, the recent arrest of Mullah Abdul Ghani Baradar, the supposed No. 2 of the Afghan Taliban, and some middle-level leaders of the organisation, in Karachi have lent credibility to the allegations of the MQM. Sources in Mr.Altaf Hussain's organisation are now alleging that not only leaders of the Afghan Taliban, but also many absconding elements of Al Qaeda, including Osama bin Laden, and his No.2 Ayman al-Zawahiri, have shifted to Karachi from North Waziristan to escape the intensified Drone (unmanned planes) attacks by the USA's Central Intelligence Agency (CIA) and that they have been given shelter by their Pashtun sympathisers in Karachi. They further allege that the Pakistani authorities and some of the political leaders are aware of this.

4.Mr. Ansar Burney, Chairman of the Ansar Burney Trust and a former Minister of the Federal Government, who was among the first to make allegations about the shifting of the Afghan Taliban leaders from Quetta to Karachi, has now gone public with allegations regarding the shifting of Al Qaeda leaders from North Waziristan to Karachi. In a statement issued on February 21,2010 carried by the "News" on February 22, he has been quoted as saying as follows: "The recent arrest of one of the close allies of Osama bin Laden and Mulla Omar from Gulshan-e-Iqbal, Karachi, has proved that my previous statements about the presence of terrorists in Karachi were true. " He expressed his grave concern over the information that Abu Riyan al Zarqawi, also known as Abu Musa, reportedly told the security agencies that Osama bin Laden and Mulla Omar were in Pakistan and that just a month ago he met them personally and added: "It was shocking to know after the reports that Osama bin Laden and Mulla Omar were in Pakistan under the patronage of some political parties and supporters in the Government. After the arrest of Abu Musa, it is now confirmed that the leadership of the al-Qaeda and Taliban are in Karachi and enjoying their life in safe havens. The President and the Prime Minister should take stern action against the increasing Talibanisation and Al Qaeda activities in Karachi.Talibanisation is a conspiracy to undermine peace in the entire region and I urge the patriotic Pakistanis and national security agencies to curb this menace or the solidarity of the country would be at stake. I had already confirmed reports and recently issued statements that after the Army operation in Swat and tribal areas, terrorists had taken refuge in Karachi and were spreading terrorism throughout Pakistan from the country’s largest city." He condemned some politicians and religious leaders for their criminal silence on the Talibanisation in Pakistan. ( 22-2-10)

Saturday, February 20, 2010

The well-publicised arrests by Pakistan’s Inter-Services Intelligence (ISI) of Mullah Abdul Ghani Baradar, the supposed No.2 of the Afghan Taliban, and two other senior Taliban leaders Mullah Abdul Salam and Mullah Mohammad Mir have not had any impact on the morale of the Afghan Taliban fighters confronting the 15.000---strong US led NATO cum Afghan National Army troops, which launched an offensive on February 13,2010, to wrest control over the Marjah area of the southern Helmand province from the Afghan Taliban.

2. While it has been confirmed that Mulla Baradar was captured in Karachi on the basis of intelligence collected by the US agencies, it is not yet clear where the other Afghan Taliban leaders were captured. According to some reports, Mulla Salam was captured from Faislabad in Pakistani Punjab, while Mulla Mir was captured in Balochistan. Acording to some other reports , both were captured in the madrasa at Akora Khattak, near Peshawar, run by Maulana Samiul Haq, the Amir of one of the factions of the Jamiat-ul-Ulema Islam Pakistan.

3. There have been some other arrests of middle-level office-bearers of the Afghan Taliban in Karachi. These arrests have been projected by many American analysts, including Bruce Riedel, formerly of the Central Intelligence Agency (CIA), as a possible game-changer and indicator of a welcome Pakistani decision to co-operate sincerely with the US against the Afghan Taliban.

4. These projections have not been borne out by reports from well-informed police sources in Karachi, which describe these arrests as a manoeuvre by the ISI to discard the well-identified leaders of the Afghan Taliban and usher in a new leadership consisting of well-motivated and well-trained recruits of recent vintage, who have not yet come to the notice of the US agencies.

5. They say that the leaders arrested since January-end in Karachi and other parts of Pakistan no longer constituted the command and control of the Afghan Taliban and that is why their arrests have not yet had any impact on the operations of the Afghan Taliban on the ground----either in the Helmand province or elsewhere. They say that the Taliban forces presently resisting the US-led offensive in the Helmand province are led by a new crop of leaders devoted to Mulla Mohammad Omar, the Amir of the Afghan Taliban, but capable of operating independently without the need for directions from a central command and control.

6. The Taliban forces in the Helmand province have been following the same tactics as the Taliban had followed in the past and as Al Qaeda had followed in Tora Bora. This tactics consists of the bulk of the forces withdrawing from the battle zone into Pakistan or dispersing to their native villages, while a smaller number stayed put in the battle zone to inflict casualties and equipment damage to the advancing US-led troops and make their “victory” pyrrhic.

7.Though it is now a week since the battle started, the advance made by the US-led forces has been expectedly slow. This is partly due to the large planting of improvised explosive devices (IEDs) and landmines by the Taliban along the expected route of advance of the US-led troops and partly due to the resistance to the advance put up by the Taliban forces still in the battle zone.

8. During the first week of the fighting, 11 NATO troops and one Afghan soldier have been killed in the operation, according to the International Security Assistance Force. The Afghan authorities have claimed that at least 40 Taliban fighters were killed in and around Marjah.

9.The repeated allegations by the NATO forces that the Taliban has been using civilians as “human shields” in order to slow down the NATO advance speak of the difficulties faced by the NATO forces. Major-General Nick Carter, of the British Army, has been quoted as saying: "I guess it will take us another 25 to 30 days to be entirely sure that we have secured that which needs to be secured and we will probably won't know for about 120 days whether or not the population is entirely convinced by the degree of commitment that their Government is showing to them. So I guess looking downstream, in three months time or thereabouts we should have a pretty fair idea of about whether we have been successful. "

10. In their media briefings, US spin-masters have been projecting the entire operation as carried out on the orders and under the political leadership of President Hamid Karzai, who is being projected as being in the driving seat of the operation. In a report carried on February 19,2010,the “Wall Street Journal” described how Gen.Stanley McChrystal , the US Commander, obtained the approval of President Hamid Karzai before launching the operation. It reported: “Gen. McChrystal said: "Mr. President, tonight is the night the operation needs to happen. I need your permission to go." Mr. Karzai paused, remarked that it was first time anyone had ever asked him to make such a decision, and gave his assent.”

11.Mr.Karzai apparently did not suspect that the Americans wanted to show him as being in the driving seat so that they could blame him tomorrow if the operation failed. A victory in the operation will be Mr.Obama’s, but a defeat will be Mr.Karzai’s. (21-2-10)

Friday, February 19, 2010

The "China Daily" carried the following report on February 18,2010, the day on which President Barack Obama received His Holiness the Dalai Lama in the map room of the White House for what was described as a private meeting with the Tibetan spiritual leader:

"China drastically slashed its holdings of United States government debt last December, allowing Japan to retake its place as the largest foreign holder of US Treasury bonds. China sold more than $34 billion in short- and long-term bonds, leaving its total holdings at $755.4 billion, according to US Treasury data released on Tuesday (February 16).The country sold about $45 billion in US Treasuries in the last five months, Alan Ruskin, chief international strategist for RBS Securities Inc, said in a research note. He said it was a "long enough period to hint strongly at a trend". Liu Yuhui, an economist with the Chinese Academy of Social Sciences (CASS), said now is a good time to cut holdings of US Treasuries as recent European debt concerns have driven up the US dollar. "China has chosen the right strategy in slashing its huge holdings of US government debt as the greenback rebounds," said Liu, adding that there is no sign of change to the long-term weakness of the US dollar.Massive US deficit spending and near-zero interest rates would also further erode the value of US bonds, said Cao Honghui, director of financial market research at CASS. The White House released a budget plan on Feb 1 that predicted the deficit for this year would total a record $1.56 trillion, surpassing last year's $1.4 trillion, which re-ignited China's concern about its dollar assets. As one of the US' biggest creditors, China has sought to diversify its portfolio of foreign exchange reserves over the past year as the share of US dollar-dominated assets is too large. "

2. The Chinese decision to cut down its investments in the US Treasury Bonds seemed to have been taken weeks before Mr.Obama sought Congressional approval for the sale of a fresh arms package to Taiwan and the White House announced that he intended receiving His Holiness during the latter's visit to Washington in February, but the prominent publication by the "China Daily" of the Chinese sale of some of its investments in the Treasury Bonds on the day His Holiness met Mr.Obama has given rise to speculation as to whether Beijing was seeking to convey a message to the US that in view of Mr.Obama's decision to sell arms to Taiwan and to receive the Dalai Lama, the US can no longer count on China for helping it out of its financial crisis by stepping up investments in the US bonds.

3. It needs to be underlined that long before the recent tensions in Sino-US relations, Prime Minister Wen Jiabo had been speaking of the Chinese worries about the strength of the US dollar and Chinese economists had been talking of the need for China to diversify the investments of its foreign exchange reserves. Suggestions had been made even last year that China should emulate India and invest more in gold.

4. Moreover, while US announcements on the arms sale to Taiwan and Mr.Obama's meeting with His Holiness were made in January, US spokesmen had been saying that Mr.Obama had mentioned about these things to President Hu Jintao when he met him in Beijing in November last. Thus, the US contention was that the public announcements of Mr.Obama's decisions should not have come as a surprise to Beijing.

5.Against this background, there is no reason to believe that there is any linkage between the Chinese decision to downsize its holdings in the US Treasury bonds and the decisions of Mr.Obama to which China has reacted adversely.

6.It is however, interesting to note that the "China Daily" itself has drawn attention to the fact that while one expert sees a linkage, others don't.

7. As expected, the Chinese Government has strongly protested against Mr.Obama's receiving the Dalai Lama, but at the same time avoided any threatening language. The comments made by the Chinese Foreign Office spokesman in his daily media briefing were restrained in language. Chinese analysts have described the meeting as reflecting the continuing cold war mentality on certain issues affecting China in the US.

8. The Chinese have continued to follow their recently-noticed policy of avoiding any demonisation of His Holiness, (19-2-10)

( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. He is also associated with the Chennai Centre For China Studies. E-mail: seventyone2@gmail.com )

Thursday, February 18, 2010

The strongly-presumed hand of Mossad, the Israeli external intelligence agency, in the successful neutralisation of a Damascus-based leader of the Hamas (Mahmoud al- Mabhouh ) while he was on a visit to Dubai in January last has come in the wake of other suspected covert actions of the Mossad in recent months, which were directed against Iranian nuclear scientists, who were reportedly playing a role in the development of the uranium enrichment technology.

2.While all these operations succeeded in eliminating the intended targets who posed a threat to Israel's national security, those directed against the Iranian scientists were copybook examples of covert actions whereas the one against the Hamas leader was not.The Mossad was able to maintain the total deniability of its strikes against the Iranian scientists.Till today, Iranian intelligence officials and police investigators have not been able to find out what happened. Apart from allegations, they have no evidence of the involvement of the Mossad, which has taken care not to leave any trace of its involvement.

3. In the case of the Dubai operation, the deniability has been weak and many tell-tale traces left behind by those who participated in the alleged elimination of the Hamas leader have enabled the Dubai Police to reconstruct in a fairly convincing manner what happened.The employment of an unusually large team of agents for carrying out the action and their inability to make the closed circuit TV in the hotel non-functional have enabled the Dubai police to make a break-through in the investigation.

4. The fact that the Mossad agents decided to go ahead with the operation despite their inability to make the CCTV non-functional strongly speaks of local collusion in the covert action. Since the CCTV was presumably functioning, those in the security control room of the hotel who would have been monitoring the CCTV, would have definitely noticed the Mossad agents forcing their way into the room of the Hamas leader. The fact that they did not raise an alarm for hours, which enabled the Mossad agents to flee Dubai without being intercepted, is an indicator of collusion in the hotel.

5.Even when they travel incognito, Hamas leaders are usually accompanied by at least one person from their security set-up who takes up a room opposite the room occupied by the leader so that they could keep a look-out for any attempt to break into the room of the leader. The fact that no one intervened as the Mossad agents forced their way into the room indicates that either there was collusion by Hamas elements too or the Mossad agents had neutralised the security detail of the Hamas leader before attacking him.

6.The entire story of the covert action will never come out.Particulars of any collusion will remain unknown for some time to come.

7.The Dubai operation of the Mossad was not copy-book perfect, but it was a successful operation in the sense that the agency eliminated a worrying threat to Israel's national security and to the lives of Israeli citizens and other Jewish persons.It was an attack carried out in exercise of the right of self-defence of the Israeli nation and people.

8. Laws of all countries---including India---- provide this right of self-defence and this rigt can be exercised by individuals as well as States.

9. Those opposed to covert actions might argue that despite the repeated resort to covert actions against identified enemies of the State of Israel and its people, Israel has not succeeded in eliminating terrorism and in countering effectively States like Iran which are determined to destroy Israel. Another way of looking at it is that but for such covert actions Israel and the Jewish people might have been forced to their knees by now by their enemies. It is such successful covert actions which have enabled the State of Israel to survive and even flourish.

10.The importance of selective covert actions to ensure the security of a State and its people has been recognised by many States----democratic and authoritarian. Some States----such as the US and Israel---admit that they have a covert action capability. Others don't, but they maintain the capability clandestinely. Pakistan is an example of a State in Asia which has over the years maintained an effective covert action capability for use against India. It has followed the model of other rogue States such as North Korea, Libya, Syria, Iraq of Saddam Hussain and Sudan in using terrorism as a way of waging a covert warfare.

11. Since 1997, India has been a pathetic victim of Pakistan's covert actions waged through different terrorist organisations. Pakistan has been using terrorism as a means of covert action against India since 1981.Between 1981 and 1997, India was retaliating in its own limted manner. The policy of covert retaliation was stopped in 1997 and has been totally discarded since then.

12. None of the Indian Prime Ministers in office since 1997 has had the political will to revert to a policy of at least limited retaliation against the Inter-Services Intelligence (ISI) and its terrorist surrogates. The result has been that our national security has been continuously endangered and our people have been dying in their hundreds. When Pakistan, through its intelligence agencies and terrorist surrogates, has been waging a relentless covert warfare against India, we cannot protect the State and the people merely by revamping our counter-terrorism atchitecture.

13. Unless we create a capability for retaliatory covert actions in a deniable manner and use that capability we will continue to bleed.

14. Between 1981 and 1997, the Prime Ministers in office followed a dual policy of "talk, talk, hit, hit" against Pakistan. They never fought shy of talking to Pakistani leaders and officials. At the same time, they never missed an opportunity to undermine the State of Pakistan covertly in retaliation against its covert actions against India.

15. Since 1997, our policy has been reduced to one of talk, talk and more talk with no retaliation even covertly. Our political leadership and large sections of our bureaucracy have no concept of the importance of covert action in an assymetric proxy war.That is the tragedy of our country. ( 19-2-10)

Three prestigious global sports events are scheduled to take place in India between now and the end of the year---the World Cup Hockey, the IPL Cricket League and the Commonwealth Games.

2. These events will atract the attention of not only the sports enthusiasts of the world, but also of the terrorists with a global oran anti-Indian agenda who will look upon the events as an opportunity to publicise their cause and to demonstrate their capability to take the intelligence and security agencies by surprise. Even if they are not able to carry out any terrorist strike on the ground, they will try to create feelings of insecurity in the minds of sports enthusiasts and the general public by the spread of rumours, issue of threats and other means.

3.The Internet and the E-mail have placed at their disposal means of spreading nervousness through threats disseminated electronically in the names of well-known terrorist organisations. It will be difficult, if not impossible, to establish the authenticity of such mails and the seriousness of such threats. At the same time, it will be unwise not to factor them into our security planning just because their authenticity could not be established.

4. It is incumbent on all those------ whether governmental or non-governmental experts, sports enthusiasts or the general public--- who are determined to defeat terrorism not to let themselves be intimidated by such rumours and threats. They should go ahead with their administrative, logistics and security arrangements for these events and ensure that these events are held successfuly undeterred by the despicable attempts of the terrorists to sow the seeds of fear.

5. The moment we let ourselves be intimidated and unnerved by the tactics of the terrorists we will be paving the way for more terrorism in the world. Defiance in the face of intimidation should be our motto.

6. While thus maintaining our equanimity, we should ensure that our security planning leaves nothing to chance and that every security-related contingency is catered for. The intelligence and the physical security agencies of the Government should work in tandem and in close co-ordination with those in the organisations responsible for organising these events, who would be in charge of physical security.

7. Access control, venue security, route security and the security of the general public in the towns and cities where these events will be held should receive priority attention from those responsible for security. Strict access control at the place of stay of the participants, along the routes by which they will be moving to and fro, and at the venue of the events would go a long way in thwarting any plans by terrorists or other mischievous elements to disrupt the events.

8. The intelligence agencies will have, as always, an important role to play in enabling the physical security agencies to provide effective security by stepping up their intelligence collection efforts through intensified street patrolling, thorough local enquiries at transport hubs and places of stay such as hotels, inns etc and through technical means. We should not fight shy of seeking the assistance and co-operation of intelligence agencies of friendly countries well disposed towards India for supplementing our intelligence collection efforts.

9.Any equipment and other technical capacity shortages should be immediately identified and the deficiencies removed through our own efforts and resources or through the co-operation of friendly governments.

10. We are fotunate that these events will be taking place at a time when we will not be preoccupied with other high-level security commitments. We should be able to devote our undivided and undiluted attention to the security of the coming events and there should be no shortage of manpower for this purpose.

11. The quality of the supervision over the security arrangements would be of the highest importance. The Government of India, in consultation with the State Governments and the central intelligence and security agencies, should mobilise the services of the best officers in physical security, who have proved themelves in the past, for supervising the arrangements. (18-2-10)

Wednesday, February 17, 2010

Two developments originating from Pakistan after the explosion in the German Bakery of Pune on February 13,2009, call for comments.

2. The first is the claim reportedly made by an individual to Ms.Nirupama Subramanian, the Islamabad-based correspondent of "The Hindu", the daily newspaper published from Chennai, claiming responsibility for the explosion on behlaf of an organisation called the Lashkar-e-Toiba (LET)--Al Alami meaning international.

3. To quote from the paper (February 17): " Identifying himself as a spokesperson of a group calling itself the LET--Al Almi, an individual using the code name Abu Jindal said the bombing was carried out because of India's refusal to discuss the Kashmir issue in the coming talks with Pakistan. Abu Jindal said he was calling from Miramshah in North Waziristan and the telephone number used to make the call carried an area code common to the Waziristan tribal area and Bannu, the adjoining district in the North-West Frontier Province. When The Hindu tried calling back, though, a recorded voice message said the number was temporarily not in use. No past communique was issued by the LET--al Almi and terrorism experts in New Delhi told The Hindu that no such group was known to exist."

4. The expression "Al Alami" meaning "International" had been used in the past by Pakistan-based terrorist organisations, which claim to have an international presence. Two examples are the Harkat-ul-Mujahideen (HUM), which is a founding member of Osama bin Laden's International Islamic Front (IIF) for Jihad Against the Crusaders and the Jewish People and the Jamiatul-Mujahideen. After 9/11, there were some terrorist strikes in Pakistani territory directed against the US and other foreign targets----such as the kidnapping and murder of Daniel Pearl, the reporter of the "Wall Street Journal ", the murder of the wife and daughter of a US diplomat with a hand grenade in an Islamabad church, a suicide attack outside the US consulate in Karachi etc. Pakistani investigators attributed these attacks as well as an unsuccessful attempt to kill Gen. Pervez Musharraf in Karachi to an organisation called the HUM--Al Alami.

5. On different occasions, Pakistani police officers gave different accounts of its background. Sometimes, they described it as the international wing of the HUM. Some other times, they described it as the wing of the HUM which represents it in the IIF. On other occasions, they described it as a spinter group of the HUM, which had split from it due to differences. They also said that the the HUM itself had started functioning under the name HUM--Al Alami after it was declared a Foreign Terrorist Organisation by the US in 1997 because of its involvement in the kidnapping of some Western tourists in Jammu and Kashmir under the name Al Faran in 1995.

6.The HUM had never made a secret of its extensive presence abroad outside India, including in Southern Philippines, the Central Asian Republics, the Gulf countries, and Chechnya. In fact, it used to brag about it in interviews to Pakistani media. Next to the HUM, the Harkat-ul-Jihad-al-Islami (HUJI) and the LET have a presence abroad outside India. While the HUJI's presence is confined to Bangladesh, the Arakan area of Myanmar, Southern Thailand, the Central Asian Republics, the Gulf countries and Chechnya, the LET is the only Pakistani organisation, which has a presence not only in Indonesia, Singapore and the Gulf countries, but also in the US and West Europe.

7. Whereas the HUM talks openly about its international presence, neither the HUJI nor the LET do so. The LET, in particular, which is close to the Inter-Services Intelligence (ISI), never talks of its activities in the West lest the ISI be embarrassed.Till today, it has not admitted that David Coleman Headley and Hussain Rana, presently facing trial in Chicago, belonged to it.

8. The only occasions when the LET had referred to its interests in overseas targets other than India were with reference to the need for a jihad against the US troops in Iraq and the need for action against the Danish newspaper and its cartoonist for publishing cartoons of Prophet Mohammad in 2005. One never found in the past any reference to an Al Alami wing of the LET.

9. It will be difficult to establish the authenticity of the telephone call received by The Hindu correspondent as having really originated from a designated representative of an organisation called the LET--- Al Alami. If one presumes that such an organisation exists and that the call did originate from its spokesman, it would mark an attempt by elements based in Pakistan to project the LET---Al Alami as part of bin Laden's IIF unconnected with the Jamaat-ud-Dawa of Pakistan headed by Prof-Hafeez Mohammad Sayeed. It is similar to the attempt made after the 26/11 terrorist strikes to project them as having been carried out by a group of Indian Muslims called the Deccan (Southern) Mujahideen.

10. The second development calling for comments is the E-Mail received by the Karachi-based correspondent of "Asiatimes Online" purporting to be from Ilyas Kashmiri, a Pakistani national, who has been indicted by the Federal Bureau of Investigation (FBI) along with Headley and Rana for conspiring to launch a terrorist attack on the offices of the Danish journal which carried the cartoons. According to well-informed Pakistani journalists such as Hamid Mir, Ilyas used to be in the Special Services Group (SSG) of the Pakistan Army before drifting into the world of terrorism----initially in Afghanistan, then In Kashmir and now in North Waziristan.

11. Till some years ago, he used to be responsible for the operations of the HUJI in J&K. He has since fallen out with the HUJI and now heads as organisation called the 313 Brigade based in North Waziristan. Headley, who had met Ilyas in Norh Waziristan, was a common cut-out of the LET and Ilyas. He was helping the LET in its acts of terrorism in India and Ilyas in his planned attack on the Danish journal. For details of Ilyas and his 313 Brigade, please see my earlier two articles titled :LET Revives 2003 Plan to Use US As Launching Pad for Terrorism in India at http://www.southasiaanalysis.org/%5Cpapers35%5Cpaper3481.html and The 313 Brigade at http://ramanstrategicanalysis.blogspot.com/2009/11/313-brigade.html .

12.In the past, Ilyas had come to notice for his activities on behalf of the HUJI in J&K, but not in Indian territory outside Kashmir. But, HUJI cadres---from Pakistan as well as Bangladesh--- have been active in Indian territory outside J&K for many years.In the E-mail, Ilyas has sought to intimidate intending foreign participants in the World Cup Hockey league, the IPL Cricket League and the Commonwealth Games in India in the comming months into cancelling their participation by warning them of the consequences of their participation.

13. Since the terrorist attack on the Sri Lankan cricket team in Lahore last year, foreign sports teams are not prepared to participate in any events in Pakistan, which has been totally boycotted. Ilyas' attempt to intimidate is part of a Pakistan-inspired Psywar to create similar nervousness among foreign sportsmen and sports officials about the likely dangers of participating in sports events in India.

14. Three prestigious sports events are to take place in India this year.The terrorists will look upon these events as providing an opportunity to publicise their cause and embarrass India. A similar attempt to intimidate sportsmen was made by the Khalistani terrorists at the time of the Asian Games in New Delhi in 1983.On getting information of their plans, Indira Gandhi, the then Prime Minister, personally monitored the security arrangements through Rajiv Gandhi and Arun Singh and requested R.N.Kao, former chief of the R&AW, to co-ordinate the physical security. Kao did so with the help of K. Sankaran Nair, who had succeeded him as the chief of the R&AW.

15. Keeping in view the likely threats and the high-profile attempts at intimidation initiated by Ilyas, the Government should constitute a high-power committee of senior officials to monitor the situation on a day-to-day basis and coordinate the physical security. The matter should not be handled in a routine manner as the follow-up action on Headley's visits to India seem to have been handled . (17-2-10)